SEOUL (Reuters) - South Korea's financial regulator called for the country's state pension funds to spend more on equities to help stabilise local stock markets, as the main Seoul index .KS11 dropped more than 3 percent on Monday.
“The sharp fall in stock prices appears to be an overreaction,” Hong Young-man, director general of the Financial Services Commission’s capital market policy office, told a news briefing.
“We hope pension funds and the like would take a leading role in helping the markets maintain stability.”
A majority of experts in the brokerage industry expect further losses in the domestic stock market to be limited in the second half and a recovery to come in 2009, Hong told reporters.
His comments came after Vice Finance Minister Bae Kook-hwan played down earlier Monday talk of a possible financial market crisis.
South Korea’s National Pension Fund, which manages about $230 billion (127 billion pounds) in assets, is believed to have room to invest another 10 trillion won in equities, Hong said.
“I hope this money could go into the stock markets.”
By 5:28 a.m., the benchmark KOSPI was down 3.36 percent, led by losses in technology titles such as LG Electronics Inc (066570.KS). The index has lost 33 percent since hitting its mid-May intraday high of 1,901.